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Square stock drops 10%, is now less than IPO price
- atom_enger 11y agoCan someone help explain what this means? Is there something about Square that we can attribute this to? Did they make a mistake? Were they overvalued to begin with? I've spent the last year trying to understand the whole private-to-public process and I'm curious what this means for Square and other companies like Etsy who are experiencing the same drop in stock price.
- the-dude 11y agoWell without reading up on Square: markets are in a downturn worldwide. Other remarkable tidbit: Shell now has a smaller marketcap than Unilever.
- eitally 11y agoThey've made some questionable business decisions to spur growth and are being called to task. They haven't seemed to be able to grow effectively without deals like that, and the sector is becoming crowded. Here's one example: http://money.cnn.com/2015/10/15/technology/square-starbucks/ http://money.cnn.com/2015/10/15/technology/square-starbucks/
- refriedbeans3 11y agoThat deal has been heavily touted as a terrible deal for square for years. As such was priced into the IPO price as well as the current valuation. That is basically the only bad deal you can point to that they are in.
- cm2012 11y agoFor pretty much no reason, a bunch of players in FinTech that are sometimes lumped in with Square (since Square has a financing product) plummeted on the markets starting a week ago. Lending Club, OnDeck, Lending Tree, etc.
- mdjt 11y agoI don't think Square was overvalued at IPO. As for today's drop: the fall in oil has hit everyone, unfortunately Square's fall of around 8% is worse than most. For Example today AMZN saw a drop of around 4% and TSLA is down 5.5%. Don't be wary ;)
- atom_enger 11y agoInteresting that a drop in oil price would correlate. Why is this and how does it impact a completely unrelated industry?
- mdjt 11y agoIMO nothing is unrelated when it comes to the markets. A fall in a primary sector of the economy will lead to uncertainty in every other sector.
- dantillberg 11y agoI'm not an economist, but my understanding is that the price of oil does not directly impact the valuation of these companies, per se, but that growth-oriented companies (especially) and oil sales depend on a strong global economy. When the price of oil falls, that indicates that people are pulling back on oil/gas/etc purchases due to constrained budgets, reduced business/operations, etc. (and/or that people buying the oil predict that others will cut back on those things in the near future)
- ZanyProgrammer 11y agoI'd think its because of the increased supply of oil.
- brainflake 11y agoIt's probably not just oil, but rather a general reduction of risk from investors. People are worried about the global economic climate and are pulling their money out of stocks and putting it into more predictable, dependable assets like gold and treasury bonds, which tend to have much lower yields but also much less risk of tanking in value during bad times.
- Silfen 11y agoSomeone with a little more knowledge of financial markets, help me out here. Is it really news if a tech company's stock drops 8-10% on a day when NASDAQ is down over 3%?
- tacos 11y agoYes, in the short term scheme of things. The bigger news is the long-term trend and the crossing of the psychological IPO threshold.
- usernamepc 11y agoNot really. Tech stocks are more volatile because more of their value (compared to someone like GE or P&G) is based on hypothetical growth projections- revenue and profit. Any market news can swing these stocks wildly- up or down. Hortonworks HDP dropped 35% y'day just because they decided to raise more money $100M and investors felt that something is wrong.
- smileysteve 11y agoMostly if we're discussing how equity compensation might not be the best option. Or how preferred investors and founders took what they could from the workers (in response to "refragmentation"). The Square IPO was less than employees who started after their last round and preferences made it even worse, meaning even though there is a liquidity event, employees who took options are out. With this significant drop, other employees who exercised their options (and paid taxes) are also out.
- aneesh 11y agoHow did preferences make it worse? Generally, preferred shares convert to common in the event of an IPO, so preferences are discarded.
- smileysteve 11y ago> With Square, investors were guaranteed a 20 percent premium on their investment, which would be worth $18.56 a share, meaning Square had to issue more shares to those investors, further devaluing the stock owned by employees. http://www.bloomberg.com/news/articles/2015-11-19/square-employees-find-some-of-their-stock-options-under-water http://www.bloomberg.com/news/articles/2015-11-19/square-emp...
- dantillberg 11y agoWell, the NASDAQ[0] and DJIA[1] are both off 3% for the day right now, along with every other index around the world. Or, to talk about price movements that are probably a bit more noteworthy, crude oil futures on NYMEX[2] are down ~7%. It's been kind of a (minor) bloodbath so far in the markets today. So, a 10% drop for a young, growth-oriented company is not terribly surprising on a day like today, I'd think. 0: https://www.google.com/finance?cid=13756934 https://www.google.com/finance?cid=13756934 1: https://www.google.com/finance?q=INDEXDJX%3A.DJI https://www.google.com/finance?q=INDEXDJX%3A.DJI 2: http://www.marketwatch.com/investing/future/clg6 http://www.marketwatch.com/investing/future/clg6
- the-dude 11y agoNot only today, almost all of this year. FED + China + Oil.
- haldean 11y agoTech looks like it might be doing a little worse than the rest, too: https://www.google.com/finance?catid=us-TRBC%3A57&sort=MARKET_CAP https://www.google.com/finance?catid=us-TRBC%3A57&sort=MARKE...
- boomzilla 11y agoWell, for some people, myself included, the not-going-so-well recent IPOs (Square, Box, etc.) would help deflate the pressure on housing prices in SF/BA. I feel for the workers at these company, but it's becoming impossible to raise a family here when the rent/mortgage is creeping up to more than half of most people's salary.
- dantillberg 11y agoHa, yes. I don't own a home, but I would like to someday, so I'm always confused how news about falling home prices is treated as "bad" in general in the media. For me, I celebrate the news. I want housing prices to go kaboom so I can afford one.
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- gtrubetskoy 11y agoAll the food trucks, street and market vendors, estate and yard sales, handymen, etc I see accept credit cards using Square. If they figure out how to hang on to this market and grow as these little vendors grow then they're in good shape. Being down 10% when the Dow is down 400+ points for days on is not unusual. The big question is - who is Square competing with.
- minimaxir 11y ago> If they figure out how to hang on to this market and grow as these little vendors grow then they're in good shape. Now that Square is a public company with shareholders, the Silicon Valley mantra of growth-at-all-costs no longer generally applies, instead the focus is on profitability/ROI. Which is something that Square lacks, and is in an industry with slim margins already.
- marrone12 11y agoThe big competitors are Shopkeep and Revel. However, neither of them are public and likely aren't going to soon given the state of the industry.
- strictnein 11y agoPayPal is in this market as well: https://www.paypal.com/webapps/mpp/credit-card-reader https://www.paypal.com/webapps/mpp/credit-card-reader
- cptskippy 11y agoI've only ever seen three of those in my entire life, they're all locked in a cabinet behind me gathering dust. On the other hand I paid for something with Square just yesterday and as my card was being swiped the lady said "We're excited because we're suppose to get the new Chip reader from Square next week."
- randomsearch 11y ago> PayPal is in this market as well: This reminds me of Peter Thiel's thoughts on monopolies. Square are in competition with every payment method of every kind. They are not in some tiny "niche" category of payment that will somehow remain invulnerable to competition from banks, Apple Pay, Android Pay, Stripe, etc. etc. I don't see how they can possibly survive in the long-term.
- tyingq 11y agoFor comparison, Paypal is down 5%, Capital One is down 5.24%, Intuit down 2.24%, Visa down 3%, Amazon down 4.4%. Not to say that a 10% drop isn't notable, but the whole market is taking a beating today.
- guava 11y agoAdditional noteworthy drops are Tesla (-5.93%) and Netflix (-7.12%).
- colept 11y agoIt's been taking a beating the last two weeks as well.
- crucialfelix 11y agoand Twitter spiked 8% from the lows, currently up 5.5% on large volume.
- bhouston 11y agoShopify is down more than 50% from its high and below its IPO offering price as well: https://www.google.com/finance?q=NYSE%3ASHOP https://www.google.com/finance?q=NYSE%3ASHOP
- sakopov 11y agoDoes this have anything to do with Square? Everything looks bad right now. I'm surprised MSFT hasn't tanked like all other Tech stocks.
- bkjelden 11y ago$MSFT is still down ~12% from late December: http://finance.yahoo.com/q?s=msft http://finance.yahoo.com/q?s=msft It's not doing too poorly today, but it's not been immune to the larger macro trends of the last month.
- ck2 11y agoTo be fair, google is tanking too http://www.google.com/finance?q=goog http://www.google.com/finance?q=goog Whole market is going nuts over the possibility of $10/barrel oil and overly strong US dollar
- cs702 11y agoAs stock market valuations of recently public companies like Square go, so do private market valuations of pre-IPO companies. In other words, as you read this, unicorn valuations are getting less "unicorny," so to speak.
- brainflake 11y agoEverything is down. This is almost certainly related to macro signals and not Square itself. Smaller cap stocks tend to have higher volatility and will normally take a heavier beating than larger cap ones.
- elif 11y agoCoins are up 8.3% on the day, which is strange considering all the bandwagon press universally condemning it. Some of it is correction, but I think generally more people are starting to treat it as a hedge against general global markets--as a haven like gold.
- brainflake 11y agoTotally. Investors are probably just moving to gold & treasury bonds as safer assets in anticipation of a global slowdown.
- bdcravens 11y agoYou mean Bitcoin? Probably best to refer to it unambiguously.
- elif 11y agoI was being intentionally coy to avoid replies from people not interested in what i was actually saying, but in bitcoin flamewars.
- bro_dong_app 11y agocool story brah, you won't be missed. should have negotiated options at your job.
- pc86 11y agoWe should just prevent accounts fresher than 24 hours from posting comments.
- frozenport 11y agoHow do you make an account to post an unpopular opinion?
- foldor 11y agoThat's not an answer. There are too many reasons someone would need to post within 24 hours of creating an account. For example, someone creates a blog post that gets posted to HN by someone else and they enter the comments to answer some questions, while the discussion is still going on.
- myth_buster 11y agoOr scenarios where throwaways are warranted to prevent leakage of personal info. I think flagging/downvoting worked well here considering the post is an hr old.
- freehunter 11y agoIt's very rare that I see a comment flagged to deletion. This might actually be the first time I've seen it.
- dang 11y agoHappens perhaps a couple dozen times a day. They're not truly deleted, because you can read them if you turn 'showdead' on in your profile. There is such a thing as deletion too, but only a comment's author can do it, and only for the first two hours.
- Animats 11y agoWhat's Square going to do when Apple gets rid of the headphone connector?
- urda 11y agoThey already started to move away from the headphone connector completely, well assuming you have NFC or a chip'd card. https://squareup.com/contactless-chip-reader https://squareup.com/contactless-chip-reader
- intopieces 11y agoThey'll ship an adapter, worst case. But really there are so many used iOS devices on the market that I can't see it affecting Square too much.
- paulpauper 11y agomore like rectangle - cut in half
- Mikeb85 11y agoAnd now they're down 1.3%. Whole market bouncing back.